After buying a yacht for $1 200 000 using a cheque, Kyle has returned to the yacht dealership to demand a refund of $200 000 on the basis that he is not satisfied with the boat.Kyle argues that the yacht is really only worth $1 000 000 and that his liability on the cheque consequently was limited to that amount.Which of the following requirements of using a negotiable instrument did Kyle fail to consider?

Question

Quizplus · Accepted Answer

Kyle failed to consider the requirement of an unconditional obligation. This means that the promise to pay, as stated on the cheque, is not subject to any conditions or limitations. Therefore, Kyle cannot argue that his liability is limited to $1 000 000 based on his subjective evaluation of the yacht's worth. The amount stated on the cheque is a valid and binding obligation to pay the full purchase price of $1 200 000.

After Buying a Yacht for $1 200 000 Using a Cheque